Employer’s right to retire an employee on medical grounds without conducting a hearing

Wednesday, 28 November 2018

Faro Mahere and Brian Ziwa

"The purpose of this article is to explain the judgment of the Supreme Court of Zimbabwe in Thandekile Zulu v ZB Financial Holdings (Private) Limited SC 48/2018."

EMPLOYER’S
RIGHT TO RETIRE AN EMPLOYEE ON MEDICAL GROUNDS WITHOUT CONDUCTING A HEARING

The purpose of this
article is to explain the judgment of the Supreme Court of Zimbabwe in Thandekile Zulu v ZB Financial Holdings
(Private) Limited SC 48/2018.

BRIEF
FACTS

Zulu was employed as a
clerk by ZB Financial Holdings (Private) Limited (ZB) from 2 September 1991 to
31 October 2009. In January 2009, she fell ill and was granted paid sick leave
from 22 January 2009 to 8 February 2009. Thereafter, the leave was extended by
15 days covering the period from 10 February 2009 to 24 February 2009. After
submitting another sick leave application for an indefinite period from 24
February 2009, Zulu was granted another sick leave. By August 2009, she had not
yet reported for duty. Her medical doctor had recommended that she had to take
bed rest from February 2009 onwards. As at 30 October 2009, Zulu’s cumulative
period of absence amounted to 251 days. On 2 December 2009, ZB unilaterally
terminated Zulu’s employment contract.

THE
LAW THAT WAS INVOKED IN TERMINATING ZULU’S CONTRACT

The termination of Zulu’s
employment contract was done in terms of section 14(4) of the Labour Act
[Chapter 28:01], as amended (‘’the Act’’).

The section provides;

‘’If, during any one-year period of service, the period
of aggregate periods of sick leave exceed-

ninety days’ sick leave on
full pay; or

subject to subsection (3),
one hundred and eighty days’ sick leave of full and half pay:

the employer may terminate
the employment of the employee concerned.’’

ZULU’S REACTION TO THE
TERMINATION

She sued for unlawful
dismissal. Her claim was dismissed at arbitration. The arbitrator found, among
other things, that the termination was lawful in terms of section 14(4) of the
Act. Zulu then filed an appeal to the Labour Court. One of her arguments was
that the termination was not done procedurally in that she was not given an
opportunity to show cause why she should not be retired on medical grounds. In
other words, her argument was that the principle: audi alteram partem (meaning
‘’hear the other side’’) which is a fundamental principle of natural justice
was not observed in line with section 2A of the Act. That section provides that
before any decision that is likely to affect the interests of an employee is
implemented, that employee must be allowed to make representations. The general
principle of natural justice can be traced back to biblical times when God
sought and questioned Adam before banishing him from the Garden of Eden.

The Labour Court dealt with
two issues:

the interpretation of the
phrase ‘’any one-year period of service’’ under section 14(4) of the Act. The
Labour Court interpreted this to mean one calendar year and dismissed Zulu’s
appeal on the basis that she had exceeded the prescribed number of sick leave
days; and

whether or not ZB had an
unfettered right to automatically terminate the employment contract on the
expiry of the 180 sick leave days. In this regard, the Labour Court ruled that
section 14(4) does not impose an obligation on an employer to hear an employee
concerned before terminating an employment contract.

Zulu was aggrieved with
the decision of the Labour Court. She appealed to the Supreme Court. The
Supreme Court dismissed Zulu’s appeal. While dismissing the appeal, the Supreme
Court however disagreed with the Labour Court’s interpretation of the phrase
‘’any one-year period of service.’’ The Labour Court had interpreted the phrase
to mean one calendar year i.e. January to December.

The Supreme Court said
that interpretation would lead to an absurd situation. For instance, if an
employee falls sick on 1 July and takes their 180 days of sick leave on full
and half pay till 31 December, he or she would still be entitled to apply for
sick leave again on 1 January the following year because they would have
entered another sick leave cycle. The number of days that the employee would
thus spend on sick leave would amount to a period of one year or 365/366 days-
a period more than twice the statutory 180 days and, certainly, a situation
which could never have been intended by the lawmakers.

Using the rules of
interpretation of statutes, the Supreme Court held that the most appropriate
interpretation of the phrase should be that a reference without qualification
to a year should be construed as a reference to a period of twelve months. It
further stated that it is logical to hold that the year in section 14(4) means
a period of twelve months from the date on which the employee fell sick.

On whether an employer
enjoys an unfettered right to retire an employee on medical grounds with
conducting a hearing, the court held that section 14(4) of the Act is silent on
the requirement for the employer to give notice to the employee before
terminating employment. In that regard, the court held that in the absence of
such a requirement, to hold that ZB ought to have afforded Zulu a chance to be
heard before the retirement would be tantamount to altering the clear language
of the section in question.

The court also held that
the said provision codifies the common law principle that an employer is
entitled to terminate an employment contract due to incapacity, and that it would
be a gross miscarriage of justice to impose an onerous obligation on the
employer when the language of the statute is clear and does not impose such an
obligation.

CONCLUSION

Section 14(4) does not
require an employer that wishes to retire an employment on medical grounds to
conduct a hearing first. As long as the employer has all the medical records
that warrant such a retirement, the employer can terminate the employment
contract unilaterally.

However, if the employment
contract provides that before such a retirement is resorted to, a hearing must
be conducted, parties will be bound by that provision. In other words, a
hearing must be conduct before retiring an employee on medical grounds, under
those circumstances. This is because parties would have agreed to provide more
favourable terms in their employment contract, in keeping with their right to
freedom of contract. Section 14 (1) of the Act confirms this position.

It provides;

‘’Unless more favourable conditions have been provided for in
any employment contract or in any enactment, sick leave shall be granted in
terms of this section to an employee who is prevented from attending his duties
because he is ill or injured or undergoes medical treatment which was not
occasioned by his failure to take reasonable precautions.’’

This was the case in Zimasco v Marikano SC 6/14. In that
case, the company purported to retire Marikano on medical ground in terms of
section 14(4) of the Act, without conducting a hearing first.

Zimasco’s Group and Policy
Procedures that had incorporated into Marikano’s contract provided in paragraph
2.1.4 that;

‘’If, during
the absence of an employee on sick leave at half pay, it is determined that
he/she should be retired on the grounds of being permanently disabled, from illness,
immediate steps must be taken to secure early retirement or to have the
employee medically boarded.’’

The company failed to
follow the procedure mentioned in that clause. Marikano sued. The Supreme Court
agreed with him. It stated that the words “unless more favourable
conditions have been provided for in a contract of employment” in section 14(1)
are wide and unambiguous.In other
words, where more favourable conditions have been agreed to, those conditions
will take precedence over the periods provided for in s 14(4) and will need to
be complied with before any termination is contemplated by the employer.

The
provisions of para 2.1.4. of Zimasco’s Group Policy and Procedures were not
complied with.In the circumstances Zimasco
could not proceed as if that provision did not exist.It was a provision that the company itself
had inserted into the Group Policy and Procedures and which had been
incorporated into the contract of employment.That provision certainly provided more favourable terms than would
normally be the case.Zimasco was,
therefore, under obligation to look at the question of early retirement or
medical boarding.

The insertion of more
favourable terms in Marikano’s contract was what distinguished his case from
that of Zulu. The Supreme Court in both cases held that if an employer was
proceeding in terms of section 14 (4) of the section only and terminated an
employment contract without notice or conducting a hearing, that would be
lawful. However, it becomes unlawful when there is a term in an employment
contract obliging an employer to conduct a hearing first. Therefore, employers
need to bear in mind this critical aspect when proceeding in terms of section
14 (4) of the Labour Act.